At the risk of sounding a bit dark, Deutsche Bank’s Joseph Lavorgna and team say the Japanese catastrophe may actually be bullish for U.S. GDP growth.
And it’s not the obvious rebuilding meme behind their opinion.
From Deutsche Bank (emphasis ours):
However, the immediate impact to the US economy may actually turn out to be a mild boost to GDP growth due to the fact the US runs a $60 billion trade deficit with Japan.
With respect to imports, US imports of goods from Japan account for 6.2% of total US goods imports. The largest component by far is machinery & transportation equipment (76.1%) followed by miscellaneous manufactured articles (8.6%) and chemicals & related products (7.9%). Most of the machinery & transportation component is motor vehicles and parts. In dollars terms this equates to roughly $46 billion per annum. Our best estimate is that some of these imports will be sourced elsewhere, possibly domestically where there is ample excess industrial capacity. In point of fact, the capacity utilization rate for motor vehicles and parts was just 62.1% in January, compared to an average of nearly 76% during the 2001 to 2007 expansion.
But it’s not all positive for the U.S GDP number. Bank economists note the risk off trade could influence U.S. growth, as financial conditions worsen, and some U.S. companies may experience supply chain problems.
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